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Sunday, November 19, 2017  
Business Practices TOC   Supplier Performance - Quality

This Section Was Last Updated on December 19, 2015

SUPPLIER PERFORMANCE - QUALITY

Policy Statement: Quality will have a 30% weight toward the overall GPA in 2015. PPM Performance will make up 20% of the Quality Performance. PPAP (Production Part Approval Process) Performance will make up 10% of the Quality Performance.

Parts Per Million (PPM)

Polaris expects its suppliers to maintain a B or better cumulative PPM quality rating for all parts supplied to Polaris Industries (see table below).

  • Polaris measures supplier quality performance on a rejected Parts Per Million (PPM) basis. A reject PPM is measured by dividing the total parts rejected (within the rating period) by the total parts received (within the same period) and multiplying by 1,000,000.
  • Only RMO disposition codes of 00, 01, 02, 03, and 04 are used to determine PPM ratios.
  • Supplier PPM results are published monthly via the Polaris Supplier Report Card.

Within the "Quality" section of the Supplier Report Card, suppliers are evaluated in terms of their reject PPM rate to Polaris. Although additional factors, such as responsiveness to corrective actions, Cpk Analysis compliance, and quality systems documentation, are key to a supplier's evaluation and are no less important, they are really part of the quality process.  In the end, it is the results that make the difference. We have found no better method to evaluate the results of an effective quality system or process than PPM. Therefore, in terms of the report card grade for "Quality", it is PPM that will be the focus.

We will be rewarding Suppliers who show PPM Performance improvement throughout the 2015 calendar year. By using a year over year PPM improvement metric, Suppliers will receive the following grade improvements:

  • 25% PPM improvement = 1 letter grade jump in the quality category
  • 50% PPM improvement = 2 letter grade jump in the quality category

For example: Supplier X has a PPM of 1250 at the end of 2015 which equals an F grading. However, the Suppliers PPM at the end of 2014 was 2500. With a 50% cut in PPM from the previous year, the Suppliers quality grade is moved from an F to a C.
 

PPM Performance Measures For The Year 2015
 

Quality Rating

PPM Measure

Cpk Index Ratio at Maximum PPM Value

 
 

A

< 100

1.47

 

Minimum Quality Expectations

B

101-300

1.37

Minimum Cpk
value approval

 

C

301-500

1.30

 

Quality Alert

D

501-1000

1.22

Quality Alert

 

F

> 1001

<1.22

 

Assumptions:

  • Process is normally distributed

  • Process is centered around nominal

 

Production Part Approval Process (PPAP) Performance

Polaris expects its suppliers to maintain a B or better cumulative PPAP Performance rating (see table below).

The PPAP Performance measurement reflects whether a supplier is submitting Production Part Approval data on time. The PPAP Perfomance measurement is based on the number of PPAPs due within the month that are approved on time. 

PPAP Performance Percentage Calculation (% of PPAPs Compliant) = (Number of PPAPs Approved on Time / Total # of PPAPs)*100 = % compliant

Example: If a supplier has 10 PPAPs due within the month and they only submit 9 within the given month, they would have a 90%  performance rating.

PPAP performance for 2014 is reflected in the previous 12 months of data on the Supplier Performance Reports but will not affect grading at the conclusion of 2015.

PPAP performance will have 10% weight toward the overall GPA in 2015. The PPAP performance is measured by the following criteria:

 

PPAP Performance Measures For The Year 2015

PPAP Rating

PPAP Measure

A

= 90% or >

B

80% -89.9%

C

75% -79.9%

D

70% -74.9%

F

< 70

PPAP Performance Criteria

If the date submitted is less than or equal to the due date, the PPAP is considered On Time

If date submitted is greater than the due date, the PPAP is considered Late.

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